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03Aug2016 Pre-Market Commentary: US Futures Point To A Lower Opening, Gold Falls Off Session Highs, WTI Crude Remains At 3 Month Low, Investors Worried About Global Financial Stability

Written by Gary

US stock future indexes are pointing to a lower opening (SPY -0.08%) with the Dow on track for its eighth loss in a row. A recent string of disappointing U.S. data prompted market players to push back expectations for the next U.S. rate hike. Oil prices struggled near April lows (WTI 39.80), gasoline inventories are expected to decline as investors wait for information on US stockpiles of crude.


Here is the current market situation from CNN Money

European markets are lower today with shares in London off the most. The FTSE 100 is down 0.96% while France's CAC 40 is off 0.67% and Germany's DAX is lower by 0.18%.

What Is Moving the Markets

Here are the headlines moving the markets.

Futures lower ahead of economic data

(Reuters) - U.S. stock index futures were lower ahead of a raft of corporate results and data, including a report on private-sector hiring.

Bill Gross favors real assets, wary of stocks and bonds

NEW YORK (Reuters) - Investors should cut risk by placing money in real assets and accept lower returns, given that markets no longer offer double-digit gains in a zero interest-rate environment, said Bill Gross, a portfolio manager at Janus Capital Group Inc .

The 'what if' spooking markets: policy success

LONDON (Reuters) - Voter rebellions? A protectionist wave? Looming recession? Islamic militancy? Perhaps the biggest shock to world markets now would be if central banks met their inflation goals.

Oil edges up to $42 after slide, but glut still weighs

LONDON (Reuters) - Oil edged higher towards $42 a barrel on Wednesday after hitting its lowest since April the previous day, supported by an industry report showing a fall in U.S. inventories and a weaker dollar.

Private company wins U.S. clearance to fly to the moon

CAPE CANAVERAL, Fla. (Reuters) - A Florida-based company won U.S. government permission on Wednesday to send a robotic lander to the moon next year, the firm's founder said, marking the first time the United States has cleared a private space mission to fly beyond Earth's orbit.

Time Warner beats profit estimates, picks up stake in Hulu

(Reuters) - Time Warner Inc reported a higher-than-expected quarterly profit as it signed up more viewers for its premium Home Box Office network, and disclosed a 10 percent stake in streaming TV service Hulu.

Under Tesla's wing, SolarCity's future remains uncertain

(Reuters) - After four rocky years as a publicly traded company in the volatile renewable energy sector, SolarCity Corp may now be wading into an equally uncertain future.

Bitcoin worth $72 million stolen from Bitfinex exchange in Hong Kong

HONG KONG (Reuters) - Nearly 120,000 units of digital currency bitcoin worth about US$72 million was stolen from the exchange platform Bitfinex in Hong Kong, rattling the global bitcoin community in the second-biggest security breach ever of such an exchange.

Exclusive: Delta's refinery sacrifices profits for lower fuel cost - memo

NEW YORK (Reuters) - Delta Air Lines Inc is flooding the New York market with jet fuel from its refinery, sacrificing refining profits in order to lower the carrier's fuel costs, according to a company memo seen by Reuters.

Another Bear Market Warning Looms In The GDP Data

Submitted by Michael Lebowitz via 720Global.com,

On Friday July 29th, 2016, the Bureau of Economic Analysis (BEA) released the second?quarter GDP figures and revisions for prior quarters. At a disappointing annualized growth rate of only 1.20%, second quarter GDP widely missed consensus expectations of 2.50% growth. Coincidently the current 1?year average growth rate has risen at the same 1.20% and that annualized growth rate has declined for five quarters in a row.

For the most part, the recent bout of stagnant GDP data has not caught the attention of the media or the markets. As consultants to those who manage wealth we believe this data is vitally important, regardless of what others may think. Accordingly, we provide some context around this data to help you better grasp its magnitude.

The graph below plots average 1?year GDP growth on a quarterly basis going back to 1948. The blue shaded areas represent periods deemed recessionary by the National Bureau of Economic Research (NBER), and the red dotted line facilitates the comparison of the current 1.20% reading versus those of the past.

Here are four important takeaways:


  1. All recessions since 1948 started with an average growth rate greater than the current 1.20% rate.

    There are only three instances where the 1?year growth rate was below the current level and recession did not occur. In the two ...

ADP Employment Continues To Lag Payrolls As Goods-Producing, Construction Jobs Slide

Following June's epic bounceback in nonfarm payrolls - the biggest delta to ADP in 6 years - Zandi and his crew at ADP 'got back to work'. June's 172k print was revised higher to 176k with July's 179k print beating expectations of 170k modestly (but still well below the payrolls levels). Once again goods-producing jobs fell (down 6k) as Services dominated (+185k) as ADP warns "this month's employment number falls short of the 12-month average primarily because of slowing in small business hiring." The weakness in construction spending is echoed in ADP's reported slide in construction jobs.

ADP continues to lag payrolls with notable increase in volatility...

And the tumble in construction jobs suggests construction spending is set to notably tumble...

Full breakdown below:

The charts:

Change in Nonfarm Private Employment

Retail Woes Continue: Kate Spade Plunges 17% After Slashing Guidance - Blames Lack Of Tourists

It wasn't the hot weather, rainy weather, or Brexit, but Kate Spade still found a convenient scapegoat on which to blame its underperformance after reporting a lower-than-expected quarterly profit as the accessories and apparel maker offered more discounts. Tourists, or rather the lack thereof.

"Several factors contributed to our second quarter results falling short of our expectations, the most impactful of which are the retail landscape and continuing tourist headwinds," Chief Executive Craig Leavitt said in a statement on Wednesday.

The company earned 11 cents per share, missing the average analyst estimate of 14 cents. However, the company expressed confidence about the future, when its COO George Carrara said that "looking ahead to the back half of the year, we are taking a prudent approach and updating our guidance accordingly. We remain confident in our long term ability to continue to achieve robust margin expansion, both in 2016 and beyond, based primarily on our ability to scale our foundation, leverage expenses, grow our licensing business and benefit from supply chain enhancements."

But not confident enough, as Kate Spade cut its full-year net sales forecast to $1.37 billion-$1.40 billion from $1.39 billion-$1.41 billion.

Kate Spade, which is known for its quirky and colorful satchels and totes, has been focusing on its luxury kate spade new york brand and investing in its online business, strategies that analysts say have helped the company fight the slowdown in the handbag market in North America. Those haven't worked to boost revenues or profits, so instead the company had to come up with the weakest excuse: the stronger dollar, which is ironic since the dollar has been roughly unchanged from a year ago.

The company has been looking to "pivot" from a pure-play handbag maker to a lifestyle brand by adding new product categories, including apparel and furniture. "Omnichannel" is s ...

Chinese Insurers Need Another Leg to Stand on

With interest rates staying low and possibly going lower, Chinese insurers need to find other means of more permanent support.

Rio Tinto Digs Cautiously Into Future of Mining

Mining giant Rio Tinto is turning a page into a new chapter. Discounting the fleeting rally in commodities prices, much remains to be written.

Why BOE's Brexit Easing Might Miss the Mark

The Bank of England is expected to act Thursday, but the time frame for the impact of Brexit is long and ill-defined.

Lyft hits record number of rides: Report

Lyft hit 13.9 million rides for the month of July, which marks a new record for the company, according to a report from Recode.

Need to Know: Stocks are in the doldrums, but this asset is about to go flying

It's dog days of summer for this market as listless stocks lead to frustrated investors. Our call of the day says if you can push away all the noise and focus on this, you might just be OK.

The Wall Street Journal: Time Warner invests in streaming with 10% stake in Hulu

Time Warner said Wednesday that it agreed to buy a 10% stake in video service Hulu, a move that comes as traditional cable companies struggle with viewers increasingly cut the cord and as Hulu prepares to launch a new live-streaming service.

Earnings Summary for Today

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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